Achi news desk-
Canada Mortgage and Housing Corp. It is expected that apartment prices may match the peak levels seen in early 2022 by next year and reach new highs by 2026.
The Housing Market Agency’s latest forecast, published on Thursday, says that despite an increase in rental housing coming on the market in 2023, supply is unlikely to keep pace with demand, leading to higher rents and low vacancy rates in the coming years.
“Unfavorable financing conditions are expected to make it difficult for homebuilders to start new rental projects in 2024,” CMHC Chief Economist Bob Duggan said in a statement.
“We anticipate that by 2025-2026 lower interest rates, continued government support, and policies that encourage greater density in urban centers should make projects more feasible.”
The CMHC said affordability in the home ownership market will be a concern over the next three years, as falling mortgage rates and the nation’s strongest population growth since the 1950s are likely to encourage a recovery in home sales and prices.
Home sales fell by about a third from their peak in early 2021 through the end of 2023, while prices fell by nearly 15 percent over the same period, CMHC said.
“During this period, the pool of potential home buyers grew through strong population growth, increased savings and higher incomes,” the report said.
“As mortgage rates and economic uncertainty ease in the second half of 2024, we expect buyers to begin returning to the market.”
He said the resurgence will also be driven by a shift in demand toward lower-priced homes and markets across Canada.
The agency expects sales activity from 2025 to 2026 to slightly exceed the average of the last 10 years, but to remain below the peak levels recorded from 2020 to 2021, due to how expensive housing remains.
CMHC also says housing starts in Canada are expected to decline this year before recovering in 2025 and 2026, reflecting the delayed impact of higher interest rates on new construction.
A report from the agency last week showed construction started on 137,915 new units last year in Canada’s six largest cities, a level that was roughly in line with those of the past three years due to a wave of new apartments.
On a regional basis, CMHC forecasts Ontario and BC will lead the decline in national housing starts this year, warning developers may struggle to even ramp up apartment construction amid challenges such as financing costs.
She expects the Arava districts to perform well, citing favorable house prices and a stronger economic outlook, which will likely attract home buyers and job seekers, which will lead to increased construction.
In Quebec, housing starts are expected to increase but remain below post-pandemic levels after a sharp decline in new home construction last year.
He said the Atlantic region will likely see less pressure on new home construction than it has since 2022 from unusually strong immigration, as starts in some eastern counties “will remain historically robust, but more closely aligned with weaker population growth.”
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